Soho’s Eli McGeever recently caught up with Geocon’s Simon Chester to chat about Asian investment trends, the importance of buyer education and the impact of recent events on the Australian property market.
About Geocon and Simon Chester: Geocon is Canberra’s biggest property developer and Australia’s fourth largest builder developer. We build high-end mixed-use precincts, with luxury hotels, a variety of residential apartments, commercial, hospitality and retail spaces. Designed by world-renowned architects, Fender Katsalidis, Geocon’s buildings are changing the face and character of Canberra’s landscape from the bush capital to a global city.
Geocon is currently working on 12 developments and hotels with a pipeline of 4000 apartments to be releases across each corner of the ACT in the next four years.
As Director Channel Sales and Strategic Partnerships, Simon Chester leads the charge for investment from outside of Canberra’s traditional sales opportunities. Simon spends to majority of his time engaging and building relationships with stakeholders to sell in markets Geocon had previously not been familiar with.
For the last two years, Simon has paid significant interest to building a base in Asian markets, particularly China, Malaysia, Hong Kong and Singapore. He is also focussed on interstate investment within Australia, establishing new Geocon offices in Melbourne and Sydney.
EM: When overseas investors think about Australia, usually Melbourne, Sydney or even Brisbane come to mind first. How have you found success promoting property in Canberra, that is lesser known, investment wise?
SC: Canberra is an emerging market and foreign investors are naturally drawn to opportunities they are more familiar with. In my role, much of the education piece is selling what the city has to offer, before we even begin speaking about Geocon or its developments.
From a city perspective Canberra has really come into its own over the last five years. The light rail system is carrying 1000s of people between town centres each day. The city will soon be bookended by world class universities in the ANU and UNSW. There is significant investment in infrastructure and business development from Government and private enterprise. It really is all happening in Canberra.
As an investment opportunity, Canberra is also turning heads from foreign investors. The ACT has Australia’s highest rental yield and lowest vacancy. We often see 40+ people line up to view apartments, it’s just so competitive. People I speak with outside of Australia are also motivated by the transition to abolish stamp-duty, the freedom to pay big deposits up front and Canberra’s independence from market conditions felt elsewhere in the country. While ever Australia grows, so will Canberra.
EM: What investment trends have you seen from Asian investors in H1 2019 towards Australian property?
SC: The biggest trends I have seen have been the willingness and eagerness from Asian investors to consider new markets. Not only are we benefiting from this in Canberra but I am noticing 2nd and 3rd tier cities in Canada and the UK also benefit from this trend.
There is so much more choice for Asian investors so the offer needs to be compelling. If your selling properties outside of Sydney, Melbourne, London, New York etc then the education on the city is key
EM: The election has passed with no change in government, APRA has modified its lending assessment rules to increase borrower capacity and the reserve bank has dropped interest rates to 1%. Have international buyers taken note of this, and are you positive on demand for international buyers in the second half of 2019?
SC: The election result has been instrumental in calming the Australian market and pushing through the lull felt by most of the east coast in early 2019. Some of the policies the opposition took to the election, like the abolition of negative gearing, would have had a negative impact on investors. I believe it would have seen the investor’s market plummet.
In the month following the election, Geocon sold more than 130 apartments. This was a steep increase from April and a good indicator that sentiment has started to swing back, thanks not only to the election result but also record-low rate cuts, APRA adjustments and positive sales results for the media to reflect on.
Despite the strength of the market here in Canberra, more broadly the Australian economy isn’t doing well, and the Aussie dollar dropped to record lows in May and June. Hovering below 70 UC cents, this has presented opportunities for foreign investors to snap up apartments in Canberra for remarkable exchange prices.